ABF Profit Falls 13% as Primark Weakens

Associated British Foods (LON: ABF) reported a 13% fall in adjusted operating profit to £1,508m for the latest financial year, led by weaker Primark like-for-like sales. The group, which owns Primark and food brands including Twinings, Ovaltine and British Sugar, held its dividend at 63.0p.

The shares have yet to trade on the results. They closed yesterday at 1,943p, inside a 12-month range of about 1,770p in the week of the 16th of March to 2,263p in the week of the 3rd of November last year.

ABF.LSE

1M 3M 6M 1Y 5Y

Revenue rose 1% at actual exchange rates to £19,582m, but fell 1% at constant currency, which strips out exchange-rate effects. Adjusted operating profit, which excludes exceptional and one-off items, compares with £1,734m a year earlier and fell 14% at constant currency. Adjusted earnings per share dropped 11% to 156.0p from 174.9p.

Our results this year reflect a challenging operating environment and macroeconomic headwinds.

George Weston, Chief Executive, Associated British Foods

Primark’s adjusted operating profit fell 11% at actual rates, 12% at constant currency, to £1,005m, and its margin narrowed to 10.2% from 11.9%. Like-for-like sales, which count only comparable existing stores, fell 2.6%: the UK rose 0.5% while continental Europe fell 4.7%. In food, Sugar swung to a £47m loss from £1m, and Grocery profit fell to £427m from £478m.

There were offsets. Free cash flow was flat at £652m, leverage stood at 1.1 times, and Primark’s UK market share rose to 6.9%. The final dividend is 42.3p, taking the total to an unchanged 63.0p.

The outlook is softer. ABF guided adjusted operating profit and earnings per share for the new financial year below this year’s, mainly because of Sugar, where it expects a loss of £70m to £170m. Primark’s margin is guided to about 10%, excluding dis-synergy, in a 53-week year.

The Primark demerger, a split into a separately listed company, is on track for December 2027. The final dividend goes ex-dividend on the 10th of December, so new buyers miss it from then, subject to approval at the AGM on the 4th of December.